Thursday, January 29, 2015

A prediction for you: Greece and the European Union will split the difference in their quarrel over debt relief. What's uncertain is how their respective governments will justify the new deal, and how much damage they'll inflict on each other before accepting the inevitable.

EU governments, with Germany in the lead, are saying that debt writedowns are out of the question. Debts are debts. Greece's newly elected leader, Alexis Tsipras, calls the current settlement "fiscal waterboarding" and says his country faces a humanitarian crisis. His government won't pay and wants much of the debt written off. Neither side is willing to give way.

What surprises me is that this all-or-nothing positioning takes anybody in. (...)

There's a serious risk that Greece will default unilaterally. This would not be in Greece's interests, but it's too close a call for comfort. The existing settlement will require the government to run primary budget surpluses (that is, excluding interest payments) in the neighborhood of 4 percent of gross domestic product. That means that if Greece defaulted, it could cut taxes or raise public spending substantially without needing to borrow.

The downside of default would be huge -- possible ejection from the euro system. That would be a calamity for Greece and, because of the risk of contagion, for the rest of the euro area as well. Nonetheless, if the EU offers Tsipras nothing, that's how things could turn out.

Therefore, in the end, the EU won't offer nothing. But the posturing on both sides needs to stop and discussions of a possible compromise need to start quickly, or Tsipras and the EU could talk themselves into the worst-case scenario they both want to avoid.

Market-societies, or capitalism, emerged when, some time in the 18th century, the expulsion of peasants from their ancestral lands (the so-called Enclosures in Britain), and their replacement with sheep (whose wool had become an internationally traded commodity), gave rise to the gradual commodification of land (with each acre acquiring a value reflecting the value of wool that could ‘grow’ on it) and, then, of labour (as the, now, landless peasants were eager to sell their labour time for a loaf of bread, money, anything of exchange value). Once land and labour became commodities that were traded in open markets, markets began to spread their influence in every direction. Thus, societies-with-markets begat market-societies.Interestingly, however, there is one last bastion of economic activity that proved remarkably resistant to the triumph of the market: firms, companies and, later, corporations. Think about it: market-societies, or capitalism, are synonymous with firms, companies, corporations. And yet, quite paradoxically, firms can be thought of as market-free zones. Within their realm, firms (like societies) allocate scarce resources (between different productive activities and processes). Nevertheless they do so by means of some non-price, more often than not hierarchical, mechanism!

The firm, in this view, operates outside the market; as an island within the market archipelago. Effectively, firms can be seen as oases of planning and command within the vast expanse of the market. In another sense, they are the last remaining vestiges of pre-capitalist organisation within… capitalism. In this context, the management structure that typifies Valve represents an interesting departure from this reality. As I shall be arguing below, Valve is trying to become a vestige of post-capitalist organisation within… capitalism. Is this a bridge too far? Perhaps. But the enterprise has already produced important insights that transcend the limits of the video game market. (...)

Many enlightened corporations do a song and dance about their readiness to let employees allocate 10% or even 20% of their working time on projects of their choosing. Valve differs in that it insists that its employees allocate 100% of their time on projects of their choosing. 100% is a radical number! It means that Valve operates without a system of command. In other words, it seeks to achieve order not via fiat, command or hierarchy but, instead, spontaneously.

The idea of spontaneous order comes from the Scottish Enlightenment, and in particular David Hume who, famously, argued against Thomas Hobbes’ assumption that, without some Leviathan ruling over us (keeping us “all in awe”), we would end up in a hideous State of Nature in which life would be “nasty, brutish and short”. Hume’s counter-argument was that, in the absence of a system of centralised command, conventions emerge that minimise conflict and organise social activities (including production) in a manner that is most conducive to the Good Life. (...)

Hume’s views influenced one young man in particular: Adam Smith, the economists’ patron saint. Indeed, Smith’s ‘invisible hand’ is no more than an application, and extension, of Hume’s spontaneous order to market-societies.(...)

While the concept of a ‘spontaneous order’ harks back to Hume and Smith, it was Friedrich von Hayek, the doyen of modern day libertarians, who coined the term. Taking his cue from Adam Smith, Hayek used the ‘spontenous order’ idea as a stick with which to beat into submission all ideas in favour of economic planning (socialist planning in particular) and all arguments in favour of an activist state. (...)In a section below I argue that Valve’s wheel is pertinent because it symbolises an attempt to create another form of spontaneous order (closer in spirit to Hume than to Hayek) within a corporation. One which, instead of price signals, is based on the signals Valve employees emit to one another by selecting how to allocate their labour time.

A corporation that tries to function as a type of ‘spontaneous order’ (i.e. without an internal system of command/hierarchy) seems like a contradiction in terms. Smith’s and Hayek’s spontaneous orders turn on price signals. As Coase et al explained in the previous section, the whole point about a corporation is that its internal organisation cannot turn on price signals (for if it could, it would not exist as a corporation but would, instead, contract out all the goods and services internally produced). So, if Valve’s own spontaneous order does not turn on price signals, what does it turn on?

The answer is: on time and team allocations. Each employee chooses (a) her partners (or team with which she wants to work) and (b) how much time she wants to devote to various competing projects. In making this decision, each Valve employee takes into account not only the attractiveness of projects and teams competing for their time but, also, the decisions of others. The reason is that, especially when insufficiently informed about projects and teams (e.g. when an employee has recently joined Valve), an employee can gather much useful information about projects and teams simple by observing how popular different projects and teams are (a) with others in general, (b) with others whose interests/talents are closer to their own.

Monday, January 26, 2015

Syriza’s victory in the Greek general election is a hopeful moment for Europe. It shows how a radical left-wing political movement, brought together in a short time, can use the democratic system to attack three menaces: the rentier lords of jurisdiction-hopping private capital, the compromised political hacks of the traditional parties who have become their accomplices, and the panphobic haters of the populist right.~

Nationalist-conservative movements, it turns out, don’t have a monopoly on the anti-establishment wave. The future doesn’t have to belong to Golden Dawn, Ukip, the Front National, Pegida, the Finns Party, Partij voor de Vrijheid or the Sweden Democrats. It could belong to Syriza, or Podemos, or Die Linke, or to an as-yet non-existent British movement – anti-austerity, pro-Europe (...)

Tsipras’s programme will work only if he manages to ignite the Syrizification of the entire Eurozone; if he can win the implicit support of voters in enough national elections across the continent to force Angela Merkel and her fellow pro-austerity north Europeans into the position of isolation that Greece is in now.

Greece risks ostracism and expulsion from the Eurozone if it renounces the terms of the loan (‘unsustainable and will never be serviced,’ Tsipras says) it got from Europe to enable it to pay off the previous loans it couldn’t pay off.

The buzz in the financial world is that the risk of ‘financial contagion’ is low this time round, should Greece drop out of the euro. But that ignores the possibility of political contagion, on which Tsipras is staking his hopes; the idea that everything could be turned on its head and it become Germany, rather than Greece, that is pushed to make an in-out choice on the euro by an overwhelmingly anti-austerity Europe. (...)

A form of bankruptcy has always been open to Greece – quitting the Eurozone and defaulting. But Tsipras doesn’t want that. He wants to stay in the Eurozone, and for Athens to be able effectively to print euros, to be allowed to break out of its austerity straitjacket and embark on a Keynesian programme of expansion.

I have sympathy for Germans clutching their heads at this. Why, they might ask, should we let the Greeks dilute our currency? To which the Greeks might answer that it is their currency too, and sometimes, when a currency becomes sluggish, a bit of dilution is what it needs. And Tsipras’s demand is not as presumptuous as it sounds. There is a sense in which the bailout was a bailout of Greece’s creditors – big financial institutions – rather than the country. Really what Tsipras seems to be seeking for Greece is something like the Chapter 11 bankruptcy rules that exist in America, where a company can file for protection from creditors, continue to operate, and still borrow money to rebuild.

But Tsipras is issuing a much deeper challenge than that to the existing European dispensation. He is demanding that the rich parts of the Eurozone take the same direct responsibility for the less successful, or unluckier, areas as the richer parts of Germany or France do for the poorer regions within their own countries. He is seeking the mutualisation of giving a damn from the Arctic to the Aegean.

This idea has always existed in the abstract, but Syriza’s victory has given it flesh. And although it might seem Greece has no leverage, the European Central Bank’s launch of quantitative easing (money-printing) is a move in Tsipras’s direction. Who knows what influence a strong showing by Syriza’s Spanish counterpart, Podemos, in December might have on Portugal, Ireland and Italy, and what the consequences in France might be? The European Union may yet fragment into something looser. But should it move in the opposite direction, it may not be on Angela Merkel’s terms.

On January 10th, the Saturday following the Charlie Hebdo massacre, terrorism expert and author Steve Emerson was on the Fox News program Justice with Judge Jeanine. Discussing the situation of Muslims in Europe, Emerson said the following thing:

In Britain, it’s not just no-go zones. There are actual cities like Birmingham that are totally Muslim, where non-Muslims just simply don’t go in.

That was an unfortunately absurd thing to say. In the 2011 national census 22 percent of Birmingham’s inhabitants identified as Muslim, 46 percent as Christian, 32 percent as other religions or none.

Birmingham is Britain’s second most populous city at 1.1 million. The municipal boundaries encompass 103 square miles, putting Birmingham midway in size between Sacramento and Salt Lake City—but in, of course, a much smaller country. For non-Muslims to be excluded from a place that size would be astounding. (...)

These two little episodes generated much comment and analysis, of quality both high and low, on the whole subject of no-go-areas and local enforcement of shariah law in European cities.

The police chief mentioned by Governor Jindal was not describing no-go areas so much as never-called-to areas:

There are cities in the Midlands where the police never go because they are never called. They never hear of any trouble because the community deals with that on its own … It’s not that the police are afraid to go into these areas or don’t want to go into those areas,’ he said. ‘But if the police don’t get calls for help then, of course, they won’t know what’s going on.

Last December, three members of a self-styled ‘Muslim Patrol’ vigilante group were jailed for harassing, intimidating and assaulting people in East London while claiming they were enforcing sharia law.

And plainly the police had gone into the area to make those arrests.

Prof. Daniel Pipes, who believes he coined the phrase “no-go zones” in this context in 2006, has since backed away from it.

While the optimists tell a good story, they blithely assume a smooth switch from the euro to the drachma. Let's run through the many difficult steps involved in de-euroization on the way to an independent monetary policy. All euro bank deposits held at Greek banks must be forcibly converted into drachma deposits, and speedily enough that a bank run is preempted as Greeks desperately try to evade the corral by moving euros to Germany. At the same time, the Bank of Greece, the nation's central bank, needs to issue new drachma bank notes, the public being induced to use these drachmas as a medium of exchange.

Now even if Greece somehow pulls these two stunts off (I'm not convinced that it can), it still hasn't guaranteed itself an independent monetary policy. To do so, the drachma ₯ must also be adopted as the unit of account by the Greek public. Not only must financial markets like the Athens Stock Exchange begin to publish stock prices in drachmas, but supermarkets must be cajoled into expressing drachma sticker prices, employees and employers need to set labour contracts in terms of drachmas, and car dealership & real estate prices need to undergo drachma-fication.

Consider what happens if drachmas begin to ciruclate as a medium of exchange but the euro remains the Greek economy's preferred accounting unit. No matter how low the drachma exchange rate goes, there can be no drachma-induced improvement in competitiveness. After all, if olive oil producers accept payment in drachmas but continue to price their goods in euros, then a lower drachma will have no effect on Greek olive oil prices, the competitiveness of Greek oil vis-à-vis , say, Turkish oil, remaining unchanged. If a Greek computer programmer continues to price their services in euros, the number of drachmas required to hire him or her will have skyrocketed, but the programmer's euro price will have remained on par with a Finnish programmer's wage.

As long as a significant portion of Greek prices are expressed in euros, Greece's monetary policy will continue to be decided in Frankfurt, not Athens. Should the ECB decide to tighten by lowering interest rates, then Greek prices will endure a painful internal deflation, despite the fact that Greece itself has formally exited the Euro and floated a new drachma.

We know that a unit of account switch (not to mention successful introduction of drachma banknotes) will be hard for Greece to pull off by looking at dollarized countries in Latin America. To cope with high inflation in the 1960s and 70s, the Latin American public informally adopted the U.S. dollar as an alternative store of value, medium of exchange, and unit of account. Even after these nations' central banks had succeeded in stabilizing their own currencies, however, dollarization proved oddly persistent. This is referred to as hysteresis in the economics literature. Economists studying dollarization suggest that network externalities are the main reason for hysteresis. When a large number of people have adopted a certain standard there are significant costs involved in switching over to a competing standard. The presence of strong memories of past inflation may also explain dollar persistence.

In trying to de-euroize, Greece would find itself in the exact same shoes as Latin American countries trying to de-dollarize. Greeks have been using the euro for 15 years now to price goods; how likely are they to rapidly switch to drachmas, especially in light of the terrible performance of the drachma relative to other currencies through most of its history? Those few Latin American countries that have successfully overcome hysteresis required years, not weeks. If Greece leaves the euro now, it could take decades for it to gain its own monetary policy. (...)

In sum, I fail to understand how Greece can ever expect to enjoy the effects of a drachma-induced recovery if the odds of drachma-fication or so low, especially given the sudden nature of a Grexit. At least if it stays part of the euro, Greece has a say in how the ECB functions thanks to the Bank of Greece's position in the ECB Governing Council. And at least Greece's inflation rate and unemployment rate will be entered into the record as official data worth considering by ECB monetary policy makers. For just as the Federal Reserve doesn't consider Panamanian data when it sets monetary policy (Panama being a fully dollarized nation), neither would the ECB care about Greek data if Greece were to leave the euro, though still be euroized.

Friday, January 23, 2015

From The New York Times'
obit for King Abdullah of Saudi Arabia, who just died at age
90:

Still, Abdullah became, in some ways, a force of
moderation. He contested Al Qaeda's militant interpretations of the
faith as justifying, even compelling, terrorist acts. He ordered
that textbooks be purged of their most extreme language and sent
900 imams to re-education sessions. He had hundreds of militants
arrested and some beheaded.

Tuesday, January 20, 2015

Our economy is a market economy: on that everyone agrees. What economists call the "price mechanism" controls the allocation of labor, the production of goods and services, and the distribution of commodities. (...)

But do we really live in a market economy? When we look at the pattern of economic transactions in our modern market economy, the striking thing is how large a proportion of transactions do not pass through anything like a market. In any given year more than three out of every four workers do not go on the labor market: they keep working for the same organization that they had worked for the prevous year, doing much the same thing, at much the same wage. When they do change jobs, they are at least as likely to change jobs within the same organization as to get bid away by another offering them a higher wage (or fired by the first as not worth their pay). Within the production side of the economy, the overwhelming proportion of movements of goods and the provision of services takes place within a single corporation: one branch or division providing something of value to another branch or division, with no money changing hands. Microsoft's application developers do not sell their products to its marketing division. Different branches do not bid for and buy the daily services of the corporation's top managers. Within each of the corporations in our economy there exists not the spontaneous division of labor produced in an unplanned fashion by the invisible hand of the market, but a planned and organized division of labor. (...)

There is a sense in which these large modern corporations do indeed live in the market economy: the prices at which they buy materials and sell goods are to a large degree those that balance supply against demand. They are set to match the marginal resource cost of the last unit of any commodity produced to the utilitarian benefit to its consumer. And when large corporations negotiate with one another, the terms and conditions they agree on are reached in the context of the threat to break off negotiations and buy what is needed on the open market if the trading partner does not provide a good enough deal. The transactions by which a corporation buys materials and supplies from and sells products to the outside world are "market" transactions (Williamson, 1981). But there is a strong sense in which we do not live completely in this market economy. As consumers we do. But as producers and employees, many of us live in an economy that is better thought of as a corporate economy: an economy in which patterns of economic activity are organized by the hands of bosses and managers, rather than a one in which the pattern of activity emerges unplanned by any other than the market's invisible hand. (...)

Still a fourth reason for the flourishing of the modern corporation is that the government finds the large corporation very valuable. Thus all kinds of benefits—from the limited exposure to liability of those who commit their equity capital to the corporation, to the fact that corporations that pay their employees in the coin of social insurance benefits do so tax-free, to the fact that corporations realize economies of scale in dealing with the government and its paperwork (whether the IRS or the MA)--give the modern large corporation a government-sponsored competitive edge. The corporation in America is valuable to the government because it can be called upon to do more than its own private purely economic tasks. From the perspective of the modern government, the corporation is the government's principal tax collector. The corporation collects the government's income and sales taxes for it. Withholding for income taxes and point-of-sale collection for sales taxes make the paying of taxes largely automatic. The government would have an infinitely more difficult time collecting anything if it had to deal with each individual for his or her entire tax bill either for income or for sales taxes.

Indeed, there is no one that the Internal Revenue Service fears more than the independent contractor: the person who does not work for a corporation, and with whom the government must deal directly in order to collect taxes. So the IRS tries as hard as it can to force independent contractors into being someone's employees. It desperately wants collecting, withholding, and monitoring compliance with the tax law can be their employers' job--and not the IRS's.

Monday, January 19, 2015

Imagine a Eugenic America where citizens who earn less than median income are forbidden to have children. Enforcement isn't perfect, so 5% of all kids born are "illegals." Over time, this leads to a substantial stock of people who weren't supposed to be born in the first place.

Pundits have the predictable range of positions on eugenic policy. Liberals demand amnesty for the current stock of illegals, and pledge stricter enforcement of eugenics in the future. Conservatives oppose amnesty - partly because they don't want to reward law-breaking, and partly because they don't trust liberals to help them strictly enforce eugenics laws. "Think-outside-the-box" thinkers occasionally chime in, "Fertility policy should be skill-based! Letting talented low-income people breed is good for America."

As this morally blind debate rages on, a libertarian arrives on the scene. He vocally proposes "Open Breeding." Abolish eugenics laws, and let any woman who wants a baby have a baby. Mainstream reactions are diverse, but uniformly negative.

Liberals demur, "These new births will drive down wages, especially for the poorest Americans. Open Breeding is a windfall for the rich, but regular Americans will suffer terribly." And "That sounds compassionate. But until we've taken care of everyone who's already here, we can't afford to allow any more needy births."

Conservatives huff, "These poor babies will be a massive fiscal burden. Think about all the money we'll have to spend on schools, health care, and welfare." And "Civilizing the next generation of Americans is already an uphill battle. These poor kids are just too culturally distant from us to co-exist in the same society."

Even many self-styled libertarians back the eugenics laws. "You can't have Open Breeding and the welfare state. Milman Friedton said so." And, "Public opinion research shows that the poor are less libertarian. When these extra babies grow up, they'll vote away our freedom."

What David Cameron thinks he's saying is, "We will command all the
software creators we can reach to introduce back-doors into their tools
for us." There are enormous problems with this: there's no back door
that only lets good guys go through it. If your Whatsapp or Google
Hangouts has a deliberately introduced flaw in it, then foreign spies,
criminals, crooked police (like those who fed sensitive information to
the tabloids who were implicated in the hacking scandal -- and like the high-level police who secretly worked for organised crime for years), and criminals will eventually discover this vulnerability.(...)

But this is just for starters. David Cameron doesn't understand
technology very well, so he doesn't actually know what he's asking for.

For David Cameron's proposal to work, he will need to stop Britons from
installing software that comes from software creators who are out of his
jurisdiction. The very best in secure communications are already
free/open source projects, maintained by thousands of independent
programmers around the world.(...)

More ambitious is a mandate over which code operating systems in the UK
are allowed to execute. This is very hard indeed. We do have, in Apple's
Ios platform and various games consoles, a regime where a single
company uses countermeasures to ensure that only software it has blessed
can run on the devices it sells to us. These companies could, indeed,
be compelled (by an act of Parliament) to block secure software. Even
there, you'd have to contend with the fact that other EU states and
countries like the USA are unlikely to follow suit, and that means that
anyone who bought her Iphone in Paris or New York could come to the UK
with all their secure software intact and send messages "we cannot
read."

But there is the problem of more open platforms, like GNU/Linux
variants, BSD and other unixes, Mac OS X, and all the non-mobile
versions of Windows. All of these operating systems are already designed
to allow users to execute any code they want to run. The commercial
operators -- Apple and Microsoft -- might conceivably be compelled by
Parliament to change their operating systems to block secure software in
the future, but that doesn't do anything to stop people from using all the PCs now in existence to run code that the PM wants to ban.

More difficult is the world of free/open operating systems like
GNU/Linux and BSD. These operating systems are the gold standard for
servers, and widely used on desktop computers (especially by the
engineers and administrators who run the nation's IT). There is no legal
or technical mechanism by which code that is designed to be modified by
its users can co-exist with a rule that says that code must treat its
users as adversaries and seek to prevent them from running prohibited
code.

This, then, is what David Cameron is proposing:

* All Britons' communications must be easy for criminals, voyeurs and foreign spies to intercept
* Any firms within reach of the UK government must be banned from producing secure software
* All major code repositories, such as Github and Sourceforge, must be blocked
* Search engines must not answer queries about web-pages that carry secure software
* Virtually all academic security work in the UK must cease -- security
research must only take place in proprietary research environments where
there is no onus to publish one's findings, such as industry R&D
and the security services
* All packets in and out of the country, and within the country, must be
subject to Chinese-style deep-packet inspection and any packets that
appear to originate from secure software must be dropped
* Existing walled gardens (like Ios and games consoles) must be ordered to ban their users from installing secure software
* Anyone visiting the country from abroad must have their smartphones held at the border until they leave
* Proprietary operating system vendors (Microsoft and Apple) must be
ordered to redesign their operating systems as walled gardens that only
allow users to run software from an app store, which will not sell or
give secure software to Britons
* Free/open source operating systems -- that power the energy, banking,
ecommerce, and infrastructure sectors -- must be banned outright

David Cameron will say that he doesn't want to do any of this. He'll say
that he can implement weaker versions of it -- say, only blocking some
"notorious" sites that carry secure software. But anything less than the
programme above will have no material effect on the ability of
criminals to carry on perfectly secret conversations that "we cannot
read". If any commodity PC or jailbroken phone can run any of the
world's most popular communications applications, then "bad guys" will
just use them.

The debate about free speech following the Charlie Hebdo murders has followed a now familiar rights vs obligations narrative. "Yes, of course people have the right to express themselves but is it wise for them to do so?" I don't find the 'of course' in some people's usage entirely convincing but I've been wondering if the question might be posed in a different way: is it either possible or desirable to have a legal framework that protects people from offence, and specifically from that sense of hurt derived from others desecrating what they hold to be sacred? The answer is no, for two reasons:

1) Taking offence is a far too subjective experience to be worked into any rational legal system. Some found Charlie Hebdo's cartoons deeply offensive whereas I have found the fact that some people couldn't even wait for the artists to be buried before they smeared them as racists obscene. I don't want to do a sermon about this. Peter Ryley summed up what I think as well as anyone. France has a long tradition of leftwing politics with a strong anticlerical strand. It was in this tradition Charlie Hebdo stood. We just don't have that in Britain - and boy doesn't it show?

2) A legal fence can't be built to protect what others consider sacred because that enclosure would be so wide as to suffocate free thought. Do we really need to demonstrate this? It's not just about cartoons, or, as others have pointed out, any representation of Mohammed but whole fields of intellectual enquiry. I was glad Nick Cohen mentioned the dearth of form criticism in Koranic studies in his article at the weekend because it's a point that should be made more often. Form criticism is basically lit crit techniques applied to the Bible, an field of theological study pioneered - like so many - in Germany. Wikipedia will inform you that this technique is 'in its infancy' when it comes to the field of Koranic studies. It is in its infancy because it is extremely dangerous, as Professor Nasr Abu Zaid discovered to his cost.

The Myth of Maria came into being as an exemplary tale promoted by moral entrepreneurs. It preceded formal research into trafficking phenomena in Brazil, informed certain studies to such a degree that it undermined their scientific worth and soldiers on today, long after many of its main precepts have been problematized by ethnographers. It has now become the central narrative for journalists, NGOs and politicians who seek to communicate to the Brazilian public a sense of urgency regarding trafficking in persons. The myth has also become central to the confection of material designed to educate the Brazilian public regarding trafficking, as we can see in the pamphlets produced in Rio de Janeiro by Projeto TRAMA and the story produced by the Bahian NGO CHAME, presented in Illustration 2. Finally, the Myth of Maria has now literally gone "prime time", becoming the central drama in Globo Network's late 2012 telenovela, Salve Jorge, where the main character is recruited to work overseas in the service industry, only to find herself being auctioned off as a sex slave in Turkey (...)

In its most basic form, the Myth of Maria recounts the story of a young, innocent Brazilian woman (almost always black or brown and always poor) who is recruited by an unscrupulous fraud (generally a white, blond, blue-eyed foreigner) for overseas work (usually as a maid or dancer). When she arrives at her destination, Maria is forced to work as a prostitute and can find no way out of her desperate situation. If the story has a happy ending, it usually involves Maria being saved by the police and "repatriated" back to Brazil. The story is "exemplary" in two senses. First, it is presented as a typical example of certain Brazilian women's experiences with overseas migration. Secondly, it is meant to impart a lesson to potential Marias: it is better for them to stay in Brazil than face the dangers of migration. (...)

In modern anti-trafficking narratives, the loss of one's passport has become such an iconic meme that it has been situated as a necessary and sufficient step for the enslavement of immigrants. Indeed, Brazil's first nationwide anti-trafficking campaign revolved around posters and pamphlets informing potential immigrants that traffickers "first take your passport, then take your freedom" (see Illustration 1).

Reflection regarding this meme quickly reveals its problems, however. Obviously, the loss of one's passport means relatively little in terms of one's ability to move about. New passports are routinely emitted to people who have lost theirs by consulates and embassies. Absent other forms of coercion, the retention of one's passport is nothing more than a nuisance: it means a delay of perhaps a week for international travel and no delay at all for local travel. Bus and train tickets can be purchased for travel within most western European nations (and the United States and Canada) without showing I.D.

The myth's insistence that the lack of a passport means effective imprisonment is thus factually incorrect and this is a point that several of our prostitute immigrant informants confirm. The persistence of this element in trafficking narratives is quite significant in symbolic terms, however. It reveals that the Myth is told from the point of view of the State and not from the point of view of immigrants themselves. A valid passport is, of course, necessary in order legally to cross most international frontiers and – referring back to Item #11 in Column Three – it is only this sort of movement which is of interest in constructing Maria's plight. Without her passport, she cannot immediately return to Brazil, which the myth naturalizes as her "proper" place in the world. In terms of the story's logic, Maria is in peril as long as she stays outside Brazil. This, then, is the true problem which the myth is discussing: the fact that a poor, black or brown Brazilian woman is out and about in the world without proper supervision. (...)

Who's met Maria?

It has been difficult to find confirmed cases of trafficking in persons in Brazil which parallel the Myth of Maria. This, paradoxically, has seemed to increase the Myth's acceptance as a "typical" report of trafficking. An incident which took place in November, 2012 during a discussion between federal anti-trafficking investigators and members of several NGOs engaged in combating trafficking in the state of Rio de Janeiro demonstrates the story's durability as a guiding narrative. Although this is one particular case, it is illustrative of a type of conversation that we've often had in our interactions with government officials and members of the anti-trafficking movement over the past several years.

During the meeting, we related the results of our research among migrant prostitutes in Rio de Janeiro, pointing out that while many of our informants reported encountering human rights violations in Europe, these were mostly at the hands of police and immigration authorities. Furthermore, we reported that our informants claimed that fraud and coercion were generally not used in recruiting Brazilian women for sex work in Europe and that everyone we had talked to said they had migrated of their own free will and likewise freely worked as prostitutes.

At this point, a young woman from one of the most important and long-standing Carioca anti-trafficking organizations spoke up. The NGO that she works for has been central to the formulation of anti-trafficking educational campaigns in Rio de Janeiro for over 8 years and has been collecting and collating information regarding accusations of trafficking in the state during that period. The organization also makes abundant use of the Myth of Maria in the educational material it produces.

"Maybe the reason you're not finding women who've been forced or tricked into prostitution is due to the fact that you've been working with prostitutes," the intern said. "Our organization works mostly with non-prostitutes, so that's why we find all these cases of women who've been lied to and tricked or forced into prostitution overseas."

"That could very well be the case," we replied. "We are certainly open to that possibility. How many cases of women, tricked or forced into prostitution overseas has your organization discovered?"

The young woman admitted that she had been working with the NGO for a year or so and that the only trafficking case that she personally knew of involved a Guatemalan man who'd been tricked into coming to Rio for forced labor in the civil construction industry. She then passed the question on to her predecessor, who had worked for the NGO for most of the prior decade before leaving to take up a government position. This woman detailed the many educational campaigns and other activities the organization had developed during the last decade, but did not answer our question. So we put it to her again:

"But during this period, how many cases of women tricked or forced into overseas prostitution did you discover?"

"There was one case involving two women six or seven years ago..." the civil servant said, hesitating and nodding at the NGO's current president and indicating that he take up the story. This gentlemen couldn't remember the incident. After a back-and-forth that lasted five minutes, it was revealed that the only case anyone present could remember that approximated the story laid out in the Myth of Maria involved two women who had migrated to Spain, worked as dancers and later voluntarily decided to work as prostitutes because the money was better, only to become frightened by the possibility of coercion, returning to Brazil.

We pointed out that this was only one incident, not "many" and that while the women might indeed have encountered sexual exploitation, they weren't tricked or coerced into prostitution and hadn't migrated in function of it. It was thus problematic to classify it as "trafficking", according to the Palermo Protocol.

"Yes," the intern replied. "But just because we don't have any cases like this [the story related in the Myth of Maria] doesn't mean they don't exist."

"But by contrast," we pointed out, "we have found a half dozen cases of Brazilian sex workers who have gone overseas, were arrested by European police, labeled as trafficking victims, deported back to Brazil and who report that they were never enslaved, coerced, or forced into anything, other than leaving Europe against their will. We've also found dozens of cases of Brazilian sex workers who've voluntarily gone to Europe, encountered difficulties and even exploitation, but were unable to report these to the authorities because they knew they'd be immediately arrested and deported as irregular, sex-working immigrants. How is it that these stories, which are quite common among prostitutes in Rio and easy to document, have become of secondary importance when compared to a story, which is used in all of your organization's literature, and for which we have a hard time finding a documented example?"

No one in the room was able to answer our question.

This, then, illustrates the real damage caused by the Myth of Maria: by focusing attention on "innocent women, tricked into sexual slavery", it pushes the needs, demands and experiences of sex-workers and migrants into the background. Reforming laws and organizing support infrastructures for Brazilian migrants overseas and sex workers at home requires a certain degree of political consensus and this is much harder to create than emotional affect through the use of myths. As anthropologist and congressional researcher Maia Sprandel points out, during the same period in which Brazil signed and ratified the Palermo Protocol and instituted its national policy and first national plan to combat trafficking, long-standing juridical projects to modify the country's obsolete and incoherent migration and prostitution laws were repeatedly tabled in the Brazilian Congress: "In a context in which laws are produced and approved, taking into consideration the parameters stipulated by international treaties and conventions that the country has signed, the work of identifying the State's legislative categories has become tedious and arid" (Sprandel, 2012).

What are not tedious and arid, however, are alarming stories of young women in sexual bondage.

Wednesday, January 14, 2015

Bryan Schatz has an interesting article in the Pacific Standard about liberal gun owners, discussing how they get by in a world where one set of peers disagrees with them about weapons while another set disagrees about virtually everything else. (...)

As the story progresses, we learn that gun-loving liberalism isn't that lonely a position. According to Gallup, there are around 16 million liberal gun owners in the U.S. They don't always feel comfortable in the NRA, but some of them have founded groups of their own (...)

Some people, Schatz reports, own guns for reasons directly related to their left-wing commitments:

I spoke to Marlene Hoeber, a transgender machinist living in West Oakland—not far from the original seat of the Black Panthers—who started her gun collection with a modern replica of a 19th-century black-powder revolver and is now "swimming" in firearms. She views her gun ownership as a political act....

[S]he owns firearms in part because she is not sure she can count on—or trust—the police. As a trans person, she knows that hate crimes happen, that some people would wish to do her harm, and that it might be up to her to protect herself.

Just a few years ago, it seemed like most of the radicals I knew who cared about gun control were opposed to it, because they associated it with racism and repression; the liberals, meanwhile, had backed off the issue, because they thought it had cost Al Gore the election. It's striking how quickly the landscape of a debate can change.

Syriza wants to reduce the burden of Greek government debt by various means, which would clearly benefit Greece and mean losses for its creditors. Its bargaining position is strong because the government is running a primary surplus. This means that if all debt was written off and the Greek government was unable to borrowing anything more, it would be immediately better off because taxes exceed government spending. In contrast the creditors’ position in such a situation is normally very weak, which is why some kind of deal is usually done to reduce the debt burden. Creditors take a hit, but not as bad a hit as they would if all debt was written off.

It might appear as if the creditors have an extra card in this particular case - they can throw Greece out of the Eurozone. Be absolutely clear, that is a threat being made by the creditors. Greece under Syriza has no intention of leaving the Euro, even if they defaulted on all their debt, so they would have to be forced out. I have never seen it set out clearly how the rest of the Eurozone would force Greece to leave without compromising the independence of the ECB, but let’s assume that they have the power to do so. Would the Eurozone ever carry out this threat?

Expelling Greece from the Eurozone because they wanted to renegotiate their debts would be an incredibly stupid thing to do. For a start, the creditors would lose everything, because obviously Greece would go for complete default in those circumstances. In addition, individuals and markets would immediately worry that the same fate might befall other periphery countries. (The story that Dani Rodrik tells is all too plausible.)

(...)

So even if some in Germany were stupid and cruel enough to suggest throwing Greece out, it seems inconceivable that the rest of the Eurozone (or the IMF) would allow it. In reality reducing the debt burden in Greece (and probably elsewhere [2]) would do the Eurozone a lot of collective good. Greece would be able to relax the crippling austerity that has had disastrous economic and social consequences. The core countries and the IMF could at least partially undo the mistakes they made from 2010 to 2012 in first delaying default, and then failing to impose a complete default, mistakes the IMF at least now recognise.

Tuesday, January 13, 2015

But what about a more anthropological perspective? The May 23rd issue of Science focused on the topic (there was even a contribution by Piketty). Two articles sum up two contrasting views, The ancient roots of the 1% and Our egalitarian Eden. The latter is probably closer to the received wisdom, while the former piece reports on revisionist work which highlights findings from hunter-gatherer societies in situations of natural surplus where inequality seems to have been tolerated or accepted. Finally, I want to point to a Peter Turchin preprint, Religion and Empire in the Axial Age, which touches upon many of the same issues. Reading the first two pieces it does seem that to a first approximation the idea that hunter-gatherers tended toward egalitarianism is still valid. The exceptions from what I can gather are cases where there were temporary surfeits of natural resources which could be hoarded and corralled in some fashion. This is in contrast to post-Neolithic agricultural societies where gross inequality coexisted for long periods with Malthusian conditions. The implication from the pieces in Science is that in the Paleolithic inequality could persist when there was plenty to go around. But we know from the historical record that in mass agricultural societies gross poverty and inequality could go hand in hand. Why? Because in Paleolithic societies the lower ranks could collude and redistribute resources in situations of scarcity, and they could not in post-Neolithic societies.

But the flip side of this is that we are not a purely egalitarian species, and hierarchy is also part of our heritage. If this was not the case I don’t think it would have been so easy to develop the concentrations of social power which arose after the Neolithic. What Turchin’s essay highlights is that egalitarianism and hierarchy are both tendencies which are at dynamic tension, and different social structures and historical epochs have obtained quasi-equilibrium states which balance and synthesize the two forces.

Many economists and non-economists of the right try and portray mainstream economics as naturally supportive of their political programme. Right wing think tanks name themselves after one of the pioneers of economics. It is normally nonsense: mainstream economics is all about market failure, diminishing marginal utility favours redistribution etc. Of course there are counter examples (Pareto optimality), so it would be wrong to say that economics leans to the left as well.
However when some of those on the left say yes, mainstream economics is all the things that those on the right say it is, they share a mutual conspiracy to distort the truth. When you are trying hard to convince policy makers and journalists that what those on the right are arguing for is not implied by mainstream thought, people from the left pop up to undermine what you say.

That last sentence probably exaggerates the importance of heterodox economics. In my view heterodox economics is far more dangerous in giving young students that lean to the left a distorted view of the mainstream which can have lasting damage. Been there, done that (briefly). I actually think that heterodox economists have some important criticisms to make, and I also think that mainstream macro orthodoxy can often discourage such fundamental criticism. However pretending mainstream economics is something that it is not just devalues these criticisms.

A long list of world leaders have flocked to Paris on Sunday to join the crowds paying tribute to the victims of satirical magazine Charlie Hebdo, the French policemen, the shoppers in a kosher supermarket. Atheists, Jews, Muslims: all dead by the bullets of fanatic jihadists claiming to have committed despicable acts in the name of religion.

From what I read and hear, the honorable world leaders have flocked to Paris to express solidarity with the French people and send a “message for the freedom of expression”.

How much do they honor “freedom of expression” in their own countries? How much “Charlie” are they?

Co-president of LSEMidEastSoc and blogger @DanielWickham took under the magnifying glass all the leaders who attend the #JeSuisCharlie rally and #MarcheRepublicaine today and created an outstanding list of 19 of them who harass, target and imprison journalists for what they write.

Friday, January 09, 2015

Popular music styles are often closely connected to the social situations where they first began. (...)

Heavy metal is a strange case, then. The music sprouted originally from working-class kids in economically ravaged, deindustrialized places like Birmingham, England. Even today, it seems to be most popular among disadvantaged, alienated, working-class kids.

But take a look at the map below, which I wrote about two years ago, and have been thinking again about over the past couple of months. It tracks the number of heavy metal bands per 100,000 residents using data from the Encyclopaedia Metallum. The genre holds less sway in the ravaged postindustrial places of its birth, but remains insanely popular in Scandinavian countries known for their relative wealth, robust social safety nets, and incredibly high quality of life. (...)

So with the help of my Martin Prosperity Institute colleague Charlotta Mellander, I examined the connections between heavy metal and a range of economic and social factors. What we found may surprise you. Mellander, who is Swedish, attributes Scandinavia’s proclivity for heavy metal bands to its governments’ efforts to put compulsory music training in schools, which created a generation with the musical chop to meet metal’s technical demands. (As The Atlantic noted last fall, this has helped the region excel in pop music as well). As always, I point out that correlation does not equal causation and points simply to associations between variables.

What we found is that that the number of heavy metal bands in a given country is associated with its wealth and affluence.

At the country-level, the number of heavy metal bands per capita is positively associated with economic output per capita (.71); level of creativity (.71) and entrepreneurship (.66); share of adults that hold college degrees (.68); as well as overall levels of human development (.79), well-being, and satisfaction with life (.60).

The bottom line? Though metal may be the music of choice for some alienated working-class males, it enjoys its greatest popularity in the most advanced, most tolerant, and knowledge-based places in the world. Strange as it may seem, heavy metal springs not from the poisoned slag of alienation and despair but the loamy soil of post-industrial prosperity. This makes sense after all: while new musical forms may spring from disadvantaged, disgruntled, or marginalized groups, it is the most advanced and wealthy societies that have the media and entertainment companies that can propagate new sounds and genres, as well as the affluent young consumers with plenty of leisure time who can buy it.

Political operatives looking to explore gamers as a voting bloc should know that gamers are more likely to identify themselves as independent than non-gamers and also are less likely to identify as Republicans.

When independent gamers are pushed to identify leanings, they are more likely to lean leftward to the Democrats.

Mapping onto their partisanship, gamers are significantly less conservative and more liberal than those who never play video games. This can't be wholly accounted for by the fact that gamers trend younger. Even within age groups, gamers lean more liberal and less conservative than their non-gaming peers.

But while they may lean more liberal, that doesn't necessarily mean gamers are fans of a centrally planned government to deal with everybody's problems. Gamers agree with non-gamers in supporting free market solutions over government intervention when possible, 52 to 43 percent. Gamers also believe (57 percent) that government is often an impediment in people's ability to succeed. And 54 percent disagree with President Barack Obama's views on the role of government.

Don't Tell Me How to Play

If there's any one trend to take away from a poll looking at gamers it's that gamers don't like to be told what to do with their lives. Again, they may describe themselves as liberal, but they do not like government policies that control individual life choices, like what products they can purchase or consume. Video games are all about making choices, right? That's one mentality that does carry over in real life (unlike the fear that games make people more violent). Our polls show that many government bans on products or activities like caffeinated energy drinks or online gambling are already disliked by Americans, regardless of gaming habits. But for gamers, this dislike of nanny-style regulation is enhanced—upgraded if you will. For every single poll question where we asked whether the government should allow people to own, consume, or use certain products or services that are currently a focus of debate, gamers are more likely to say yes than non-gamers. In only one question did gamers support a government ban, for 3D-printed guns. But even then, 42 percent of gamers still supported allowing people to print them, compared to 26 percent of non-gamers.

Probably the biggest gap was the gamer support for allowing use of bitcoin as a currency—55 percent for gamers; 30 percent for non-gamers. This example is particularly interesting because a majority of gamers and non-gamers alike knew very little or nothing at all about bitcoin. But non-gamers appear more likely to call for government regulations or a ban on a product they've never heard of than gamers.

Gamers Concerned About Police Power, Accountability

Though gamers may love the idea of having Four Loko and marijuana delivered to them by drones so they can focus on improving their Call of Duty skills, they are much more reluctant than non-gamers to give police the authority to use them and are more concerned than non-gamers about militarization of police (though even non-gamers are concerned about the trend). Seventy percent of gamers think drones and miitary tools in the hands of police goes too far. Only 57 percent of non-gamers agreed.

Furthermore gamers are much more likely to believe that police are not held accountable for misconduct. Only 33 percent of gamers think police are punished for misconduct, compared to 51 percent of non-gamers. Though three-quarters of gamers have a positive view of the police, they're much less likely to believe the bad apples are properly disposed of.

According to a common line of thinking, campaign donors and primary voters are pulling politics to the extremes. Most Americans, the story goes, would prefer their legislators to chart a moderate course.

In a working paper, I question this view. Using a survey designed to measure support for extreme policies, I find that the characterization of the public as largely centrist rests on shaky ground. On many issues, much of the public appears to support more extreme policies than legislators do. And while many argue that today’s engaged activists support more extreme policies than the broader public, my findings suggest the opposite: The disengaged and infrequent voters who allegedly constitute the moderate middle are actually more likely to endorse extreme policies than politically active voters.

Why might we have missed much extremism in the public generally and among the less engaged? The answer is subtle, but has important implications for how we should think about the the public’s attitudes and politicians’ positions. And it might be best explained by pretending you have a crazy uncle.

Suppose your uncle believes that the United States should nationalize the health-care system (a very liberal view) and that gay people should be jailed (a very conservative view). And suppose your uncle is represented in Congress by a moderate Republican who supports civil unions (but opposes gay marriage) and who supports helping the poor purchase health insurance (but opposes Obamacare), two positions just right of center.

Your uncle’s views can’t really be described in ideological terms like “center left” or “very conservative.” He has some mix of very liberal and very conservative views, many of them extreme. But if we try to compare your uncle’s views to his congressperson’s positions in abstract, ideological terms, as academics and journalists often do, some plain facts about your uncle and his legislator both become obscured. Since your uncle supports some liberal policies and some conservative policies, we’d call him a “moderate on average.” However, his congressperson’s conservative votes on both Obamacare and gay marriage mean we might call the legislator conservative. We thus might condemn your uncle’s congressperson for being a conservative extremist while celebrating your uncle’s moderation. However, it’s quite clear that your uncle’s views tend to be further outside the mainstream, just not consistently in one direction.

Vladimir: [W]hy don't you take account for self selection. The collegial people who like to mingle and would produce the positive externality actually go to work or at least drop by the office just to say hello to their colleagues. The socially inept or highly introverted stay home and spare us the negative externality of their dour presence.

Frances Woolley: Vladimir - I'm not convinced about the collegial come in/dour stay out theory. One can make a completely different argument: Collegial people will tend to have friends and people to talk to wherever they go - in the park, at the local coffee shop, or perhaps in Montreal/Toronto/California/India/where ever they happen to be hanging out at the moment. Dour people, on the other hand, come in to work because it's the only place where they can find social interaction.

They were talking about Acid House on the radio this morning. On Radio 4. On the Today programme! Then again, Acid House was 25 years ago and the people who made it happen are now middle-aged. Was it the last of the great revolutions in music and youth culture? It’s difficult to think of anything since that has had quite the same impact.

So if fashion is losing its edge, is rock ‘n’ roll going the same way?

Suzanne Moore thinks so, as she compares the music and performance of Lady Gaga with that of the late Lou Reed:

[I]f Gaga is working overtime to shock us, it just isn’t happening. (...)

You could say the same about most of the artists that have appeared in recent years. . Amy Winehouse had a great voice and her wild lifestyle made headlines but her style of music was not new. Same for Pink, Adele and a host of others. They are talented people but they haven’t recorded anything that could not have been released fifteen years ago. The same is true of guitar rock. Today’s jangly indie bands don’t sound a lot different from the jangly indie bands of the nineties. (...)

This would have been unthinkable a few decades ago. Radio stations played the classic oldies like Elvis but everything else was pretty much forgotten a couple of years after it had been released. When the ska revival happened in 1979-80, we danced to Tears of a Clown, Don’t Call Me Scarface, Madness and Whine and Grine with no idea that we were listening to covers. These songs were over ten years old and no-one played them any more. They were dead and buried. You’d be more likely to hear the original version of Tears of a Clown on the radio now that you would in 1978. Music from even five years ago was for older brothers and sisters. Each generation had its own sound. (...)

A couple of years ago, these themes were the subject of a brilliant Vanity Fair article by Kurt Anderson.

The past is a foreign country, but the recent past—the 00s, the 90s, even a lot of the 80s—looks almost identical to the present. This is the First Great Paradox of Contemporary Cultural History.

Think about it. Picture it. Rewind any other 20-year chunk of 20th-century time. There’s no chance you would mistake a photograph or movie of Americans or an American city from 1972—giant sideburns, collars, and bell-bottoms, leisure suits and cigarettes, AMC Javelins and Matadors and Gremlins alongside Dodge Demons, Swingers, Plymouth Dusters, and Scamps—with images from 1992. Time-travel back another 20 years, before rock ’n’ roll and the Pill and Vietnam, when both sexes wore hats and cars were big and bulbous with late-moderne fenders and fins—again, unmistakably different, 1952 from 1972. You can keep doing it and see that the characteristic surfaces and sounds of each historical moment are absolutely distinct from those of 20 years earlier or later: the clothes, the hair, the cars, the advertising—all of it.

Now try to spot the big, obvious, defining differences between 2012 and 1992. Movies and literature and music have never changed less over a 20-year period. Lady Gaga has replaced Madonna, Adele has replaced Mariah Carey—both distinctions without a real difference—and Jay-Z and Wilco are still Jay-Z and Wilco.

(...)

It’s true that old blokes have always moaned about young people’s tastes. Dads wouldn’t be dads if they didn’t say the music their kids listen to all sounds the same.

But this is different. Dads never said ‘it all sounds the same as it did when I was young‘. In 1977, if you’d suggested there was any similarity between Johnny Rotten and Gene Vincent you’d have got a slap. From both adults and kids. These days, the middle-aged men who don’t get out much are complaining that things aren’t changing fast enough and that the kids just aren’t revolting any more. How do you shock your parents nowadays? You certainly can’t do it with rock n roll, not in an age where whole families go to Glasto and teenagers listen to bands that were formed before their parents were born. (...)

For some youngsters, especially the boys, the allegiances and sense of identity that used to be anchored in rock bands and youth tribes now comes from gaming. Gaming is the new rock n roll – even the Christian right has noticed. Perhaps that is where you’ll find some of the innovation and energy that used to go into music. Unless that, too, is yesterday’s news.

What does this all mean? I really have no idea but it does feel like yet another Back-To. There have been a lot of them recently. We are going back to 1938 levels of income distribution, back to a time when profits took the lion’s share of GDP, back to a time when charities, rather than the state, were expected to provide for the poor, back to lower economic growth. And back to a time before rock n roll when sons dressed like their fathers. All of which makes me wonder whether the postwar world, with its high wages, increasing equality, high economic growth and rock n roll revolutions every few years, may turn out to be a historical blip.